Will Retiring Baby Boomers Impact Housing Industry?
In an article for the website Property Update, Ross Guest sheds distinctive light on the connection between our ageing population and housing prices.
For many decades, economists have sought to connect the two phenomena and I can say with more than a casual understanding of precedence that economists have been very sombre about the effect ageing population might have on the housing prices.
Will their mass retirement cause a housing industry collapse?
Guest dissects the past hypotheses with panache. He says that there is always talk about how Baby Boomers will need to sell their houses to fund their retirements. And with their big numbers, it might mean a colossal reversal in the house price graphs. Guest denounces this theory with various counterpoints; the strongest point he offers is that Baby Boomers do not need to sell their houses anymore to release equity. They can do so through plenty of reverse mortgage and equity redraw loan options.
Long-term factors largely ignored
Guest opines that we have been short-sighted in figuring out housing boom prospects. We look at low interest rates, Asian influence, increasing penchant towards undertaking debt as the chief factors but these are only the short-term factors. There are many long-term ones, too, which need to be analysed. Ageing population is one such long draw. This said, it must not be seen as a negative development, asserts Guest.
How the scene might pan out
Yes, there might be a “slow burn-out” due to increasing numbers of retiring Baby Boomers, contests Guest, but it will not be a rapid plunge and will give enough restorative hints while it is on. Most of the investors belong to the age group 35-59 and when these same people begin to go past the 60s, they impact the volume of investment for sure. However, this is nothing a redeemed economy like Australia cannot cope up with.
You can read the original article here.
I think there is a need to review this particular issue from a different angle, too. What if the Baby Boomers do not have to sell their homes to meet their post-retirement needs. I think the solution lies in better retirement planning- one that might include, but certainly not be limited to, strategic diversification of assets, adding beyond the compulsory to their Superannuation funds, and smart management of debts.
How much impact will an increasing percentage of retiring Baby Boomers have in your opinion?